Health Care, Consuming and Politics in America

We know that escalating healthcare costs are a huge threat to our national solvency, to budget deficits and the national debt. It is the major political issue as we have seen over the battle for and against ObamaCare. It continues to simmer in the form of coming battles over Medicare and Medicaid.

The basic facts are, “About 44 million people in this country have no health insurance, and another 38 million have inadequate health insurance. This means that nearly one-third of Americans face each day without the security of knowing that, if and when they need it, medical care is available to them and their families“ according to the PBS investigative report “Healthcare Crisis: Who’s at Risk?” See and read all about it at http://www.pbs.org/healthcarecrisis/

This issue is so complex that most Americans tune out and go about their normal lives hoping for the best.

Many people simply can’t afford health insurance so they live day to day without medical check ups for themselves and their families. When they get sick they often wait as long as possible and only try to get help when absolutely necessary often by going to an emergency room.

For many Americans the choice is to set aside some funds for healthcare and give up other expenses that have become as necessary for most people as food and shelter. When faced with the choice of a $2,500 a year family smart phone plan (Consumer Reports estimates that’s roughly the annual cost of a 2-year contract) or buying a basic health insurance policy I venture to guess that most Americans will go for their cell service. Even some of the lower income folks.

A second choice people and families make is between health insurance and cable TV. I believe that most can live without one (health insurance) but not the other. Cable runs around $100-150 a month, which would be enough for a very basic health insurance policy.

By now you may be getting my drift. In the America of 2013 the competition for our dollars is so fierce and the products or services so tempting that it’s very difficult for families or individuals to make sound choices. I personally know many people, mostly former students, who have no health insurance but have high-end smart phones and expensive service plans as well as complete cable.

Entertainer Justin Bieber has just endorsed a “prepaid” card that is a land mine of charges. According to MS Money, “The Bieber-endorsed prepaid card has a monthly fee of $3.95 as well as some other charges:
• Loading charges of $2.95 from a debit or credit card; 75 cents from a checking or savings account.
• Replacement fee of $7.95.
• ATM charges of 50 cents per balance inquiry and $1.50 per withdrawal.
• If the card is inactive for 90 days, there is a $3 inactivity charge.”

This card is aimed at teenagers and their families who no doubt don’t have a clue about budgeting nor have they read the fine print that came with the card. These consumer products were unheard of a few decades ago and they all divert individual and family dollars from what I call “broccoli and spinach” expenses such as health insurance or going to a dentist for check ups or a doctor for regular physical exams.

Politicians are quick to avail themselves of the market economy argument. “The government should not tell people how to spend their money.” “If people want to use a prepaid debit card that’s their choice.” This assumes that most people are informed consumers in a high pressure market economy and know the tradeoffs involved when they sign a contract or make a purchase.

The truth is, of course, the opposite.

For example, according to Lawyer Monthly, “The research released from Ofcom which found that nearly half (47%) of internet users were ignorant as to whether the content they download is illegal or not, has been met with concern by the Federation Against Software Theft.” This is only one example of the ignorance of most consumers about the products and services they buy which is amply documented by research.

The Journal of Consumer Affairs had a fascinating article which examined, “…the alternatives which have been available to the Federal Trade Commission in deciding what members of the consuming public it is committed to protecting. The choice has been between the “reasonable man standard,” under which it protects only those who act reasonably in the marketplace and not those who act foolishly, and the “ignorant man standard,” under which it protects all consumers without regard for the reasonableness or foolishness of their behavior. A third possibility is a standard lying between these two, under which the Commission protects consumers acting foolishly provided such actions are committed not by stray individuals but by substantial segments of the population.” Reasonable Consumer or Ignorant Consumer? How The FTC Decides by Ivan L. Preston.

This is interesting because it recognizes the fact that buying stuff is a complex process. Some people foolishly and with full knowledge that they are taking chances buy stuff. Others simply don’t have enough reasonably accessible information to make an intelligent decision.

I recently upgraded my iTunes software. Before it would install it asked me to agree to the terms. I’m sure that you have faced that numerous times as well with apps that download. I tried to read it but the type was so small and the document so lengthy that there was no reasonable way that I could. So I clicked “agree.” I have no idea to what I consented. For all I know they now are entitled to my first-born or my home.

But the free market politicians would say, “Well that’s your problem! You agreed so now you own it!”

That concept may have been practical as in “Buyer beware” when the decision was to buy or not to buy the fish at the street market. If it smells rotten you should not buy it. Today most consumers have no possible way of knowing for example, if the drywall used in the new addition is safe or toxic. A friend of mine became very, very sick and they discovered that it was likely toxic drywall. Likewise the average consumer cannot possibly drill into a toxic mortgage instrument or a mortgage that is written so that it suddenly balloons into an unthinkable price that the family could never afford. Yet that was exactly what happened to millions of Americans during the disastrous period we have just gone through.

All of this adds up to a serious crisis in the healthcare debate. Consumers in the United States will shift the burden of what they don’t want to spend their own money on to the taxpayer and thus the government. Medicare and Medicaid are only two of many other state-run healthcare programs that often fill the gap of consumer spending on, as it were, “candy” and not spinach or spend their bucks on products such as “Wax Vac” that sucks dirt out of your ears! Yes we paid into Medicare but we all take out much more. It is sort of a Ponzi scheme.

Not to recognize the tempting pressures we face is to ignore a certain reality of life in a high-pressure consumer society where there is “candy” everywhere. Politicians who don’t recognize that, and there are many, are simply living in a La La Land.